On April 20, 2017, staff from the Northeast’s Independent System Operator, ISO New England Inc. (“ISO-NE”), presented a proposal to its ten-member Board of Directors on how to better incorporate state-subsidized new resources into ISO-NE’s Forward Capacity Market (“FCM”). The proposal contemplates a two-stage process whereby retiring resources that clear the annual Forward Capacity Auction (“FCA”) can transfer their capacity obligations to state-subsidized generators in exchange for payment and permanent retirement. If approved by the Board of Directors, stakeholder discussions could begin in May, with associated tariff revisions filed with FERC in December. Continue reading
In an order issued on March 7, 2017, the United States District Court for the Eastern District of California rejected arguments from FERC regarding the scope of review and applicable procedural rules governing the court’s review of a market manipulation enforcement proceeding. The court held that the Federal Rules of Civil Procedure (“FRCP”) applied to the action and rejected arguments that it was limited to “de novo” review of the administrative record as compiled by FERC. As a result, the court ordered FERC to provide discovery to the opposing parties. Continue reading
On February 21, 2017, the North American Electric Reliability Corporation (“NERC”) submitted its annual risk-based Compliance Monitoring and Enforcement Program (“CMEP”) report to FERC. In the report, NERC reviewed the CMEP’s progress for 2016 and proposed two enhancements to improve the program’s efficiencies and effectiveness. Specifically, NERC proposed (1) discontinuing the requirement that registered entities publicly-post their noncompliance logs and (2) expanding the use of Compliance Exceptions (“CEs”) to include certain moderate-risk noncompliance issues. NERC asserted that the proposed enhancements would allow the CMEP to better target higher-risk issues that can impact the reliability of the bulk power system. Continue reading
On February 1, 2017 FERC issued an order approving a settlement between its Office of Enforcement (“Enforcement”) and Houston-based power marketer GDF SUEZ Energy Marketing NA, Inc. (“GSEMNA”) following an investigation into whether GSEMNA violated FERC’s anti-manipulation regulations from May 2011 to September 2013. As part of the agreement, GSEMNA neither admitted to nor denied the alleged market manipulation violations, but agreed be subject to monitoring and annual compliance reporting as well as to pay a disgorgement of $40.8 million in unjust profits and a civil penalty of $41 million to the U.S. Treasury. Continue reading
George Washington University Law School’s Journal of Energy and Environmental Law recently published an article by Adrienne Thompson titled, Preparing for the Energy Future by Creating It: What State Public Utility Commissions Can do to Promote Sustainable Energy Policies. The article appeared in the Fall 2016 issue of JEEL, but was recently made available online.
Safe, abundant, and reliable electricity is the bedrock upon which the United States has built its modern economy. Our national security, commercial activity, and day-to-day living depend on the stability of the nation’s electric system—a system facing a set of challenges unmatched by any other in the grid’s century-long history. Stringent environmental regulations, climate change concerns, waves of older generator retirements, protracted natural gas market dominance, third-party competition, as well as increasing renewables and demand-side technology integration are just some of the realities coalescing into the perfect storm for electric utilities and regulators. Although intimidating, these challenges must be addressed. With their experience and duty to regulate in the public interest, state public utility commissions (“PUCs”), also called public service commissions, are well-positioned to help solve these problems and guide our transitioning electric system toward a low-carbon future.
To that end, this Article explores how PUCs can influence this evolution and promote sustainable energy goals, especially in the realm of generator selection. Part I discusses the changes happening in the electric industry today and why state-level regulation is necessary in the absence of effective federal action. Part II briefy summarizes the development of the electric system, as well as federal and state regulatory schemes. With that background information as context, Part III sets out various options for state PUCs to pursue in advancing a sustainable energy agenda.
The difculties facing electric utilities and regulators today bring with them a host of uncertainties about how our electric system can cope in the near-term and thrive in the longterm. However, by embracing the opportunities inherent in this transition to a twenty-frst century grid, state regulators can prepare for tomorrow’s energy future by helping to create it today.
The Energy Law Journal has recently published an article by Adrienne Thompson on low-income ratepayer protection issues. The article will be in print soon and is available electronically here.
From distributed energy resources to smart meters, we are witnessing one of the most significant economic and physical transitions in the history of our electricity sector. As utilities, regulators, and stakeholders grapple with transforming our aging grid, one under-examined issue is how these changes will impact low-income ratepayers. Specifically: as reformers begin to align utility pricing structures with true system costs, what will happen to the rate-based subsidies helping to provide electricity to these financially vulnerable consumers? With millions of Americans otherwise unable to afford utility service, the answer to that question has real-world implications. This article analyzes the intersection of grid modernization efforts and low-income ratepayer assistance programs. It discusses the unique problems facing low-income customers, and explores norms like “universal service” that underpin utility regulation in general, and ratepayer assistance in particular. Ultimately, this article proposes policy solutions to facilitate the goals of both grid modernization and low-income ratepayer assistance. Only by tackling this issue head-on can policymakers ensure that tomorrow’s energy future will look bright for all ratepayers—regardless of their income.
On October 26, FERC denied a rehearing request from San Diego Gas & Electric Company (“SDG&E”) following a March 2, 2016 order allowing only a 50 percent cost recovery in the event that a certain construction project is abandoned or canceled. As the Commission reiterated, utilities are generally allowed 100 percent cost recovery only after a determination of eligibility for “Abandonment Incentives,” whereas only 50 percent cost recovery is typically allowed before such determination. Thus, the Commission noted, “it would be reasonable to infer” the requirement for utilities to request eligibility for “Abandonment Incentives” before significant expenditures are incurred. Continue reading
On September 30, 2016, FERC accepted the change in status filing submitted by Puget Sound Energy, Inc. (“Puget”) and certain affiliated generators. The filing informed FERC of the companies’ intent to join the Energy Imbalance Market (“EIM”) administered by the California Independent System Operator Corporation (“CAISO”) beginning on October 1, 2016. As discussed in a previous WER article, in August 2016, FERC approved a similar filing and anticipated EIM start-date from Arizona Public Service Company (“APS”). With this order, Puget and APS become the fifth and sixth balancing authority areas to join the EIM, following PacifiCorp East and PacifiCorp West in 2014, and Nevada Power Company, Sierra Pacific Power in 2015. Idaho Power plans to become the seventh balancing authority area in 2018. (see April 13, 2016 edition of the WER).
On September 22, FERC denied a request to rehear an April 21, 2016 order involving a complaint from the Occidental Chemical Corporation (“Occidental”) against the Midwest Independent Transmission System Operator, Inc. (“MISO”). In so doing, FERC reaffirmed its April 21 Order and further explained its previous finding that MISO’s treatment of qualifying facilities (“QFs”) within the Entergy service territory neither violates the Public Utility Regulatory Policies Act of 1978 (“PURPA”) nor the Federal Power Act (“FPA”). Continue reading
Construction has commenced on Seattle City Light’s Denny Substation — a new electrical infrastructure project planned for the city’s South Lake Union neighborhood. Not only will the project help address the growing electricity demand for Seattle’s tech, biomedical, and non-profit sectors, but it also aims to meld functionality with industrial design and landscape architecture to form a distinctive public meeting space. As reported in Slate this week, the substation will include a public park, off-leash dog area, as well as art installations and a plaza for entertainment and food carts. There will also be an elevated walkway to allow onlookers to check out the facility and learn more about how the primarily clean electricity coming from the substation (89% hydro, and 3% wind-power) is distributed throughout the city.
As acknowledged by the substation’s design company, NBBJ, electricity system infrastructure is not typically designed to be anything other than “glum, concrete facilities filled with wires and electrical equipment relegated to obscure desolate stretches of cityscapes.” Thus, the notion that such a project could not only be visually appealing but also an urban hot spot makes this a unique endeavor.
The substation, slated for completion in 2018, also comes at a pivotal time for the country’s electricity infrastructure. Much of the grid is aging and in need of repair and replacement–as starkly illustrated by the “D+” grade that our energy infrastructure most recently earned from the American Society of Civil Engineers. Although many policymakers, regulators, and stakeholders, are looking at non-wires solutions to avoid shelling out the billions necessary to address this problem, the Denny Substation could help make such projects, when necessary to build, easier to promote…and a lot more fun to visit.
(These pictures, along with others, can be found on the design company’s website, linked-to above).